Mr. Fuller is now developing virtual music stars after a deal that made him one of the largest shareholders of digital production firm
Pulse Evolution Corp.
Previously, the company made waves with its holographic or lifelike images of dead singers such as Tupac Shakur and Michael Jackson.

Mr. Fuller is developing an entirely fictional character for young fans; another persona is based on a little-known artist who he believes might have a better shot at success as a digital entity. He declined to reveal the name of either make-believe singer, but he was willing to share the identity of one performer in the works: a virtual incarnation of Elvis Presley.

These acts, which he plans to introduce publicly within the next 18 months, will be able to interact with fans in many languages, appear in multiple locations at the same time and perform full-length musical sets. He believes that such fictional artists could amass bigger followings and generate more revenue than real ones—if superheroes,
Disney
princesses and Star Wars characters are any guide.

“Interestingly music hasn’t really experimented in this area at all,” said Mr. Fuller, who would be the sole copyright owner and retain all of a completely fictional artist’s revenue. For characters based on real artists, he would likely take half of the revenue, he said, though it could vary for each case.

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Pulse Evolution’s chairman, John Textor, said the company now has the technology to put these digital pop stars on stage in extremely lifelike form—down to details like the fluid in the meniscus of their eyes.

By contrast, the hologram of Michael Jackson that Pulse produced for the Billboard Music Awards two years ago worked only “because the camera’s perspectives were pretty pulled back,” Mr. Textor said.

In Japan, for instance, Hatsune Miku is a popular virtual star that typically appears on stage as an anime character, and is visible to the audience without the aid of viewing devices.

Pulse says it can program these new virtual artists with artificial intelligence to respond to a wide range of possible questions and situations. The company, based in Port St. Lucie, Fla., acquired the rights to create a virtual Elvis Presley in 2014, and is working with Mr. Fuller to have the virtual King of Rock 'n' Roll performing full-length concerts within the next 18 months.

But the equipment required for fans to watch such virtual concerts at home are just rolling out, and come at lofty prices. Further, there are no devices on the mass market that beam holographic images into fans’ living rooms.

Facebook Inc.’s Oculus VR this month is shipping the first of its $599 virtual-reality headsets, while
HTC Corp.
is selling similar headsets for $799. Both of these need to be connected with a high-end personal computer to work, and create immersive experiences.
Alphabet Inc.
sells $20 cardboard virtual-reality viewers that plug onto a smartphone.

Companies such as Magic Leap Inc. have demonstrated devices—from lightweight glasses to TVs—that produce the image of digital pop stars over a user’s actual surroundings, but none of these so-called augmented-reality products are commercially available.

Even without these home-viewing options, though, virtual alter egos could help musicians expand their global fan bases by performing and giving foreign-language interviews in far-flung markets that the artist wouldn’t otherwise have time to visit, Mr. Fuller said. Artists have had to step up the pace of their touring and other live appearances to make up for the continuing decline in record sales, promoters and artist managers say.

Some musicians have already created fictional alter egos: French electronic duo Daft Punk performs only in face-obscuring robot helmets, Deadmau5 usually appears on stage in a giant mouse head, and Blur frontman Damon Albarn records music for the Gorillaz—a band of fictional, animated characters drawn by comic book artist Jamie Hewlett. But these artists are generally present for their own concerts and haven’t had their characters perform on multiple stages at the same time.

Mr. Fuller, a former record-label executive, launched his own management firm—XIX Entertainment—in 1985, pausing several years later to start new projects, one of which was the British TV show Pop Idol, the precursor to American Idol. Around the same time he also began his quest to create a virtual pop star, but “the technology just wasn’t there,” he said.

One of Mr. Fuller’s virtual stars in development is modeled after a real aspiring artist who Mr. Fuller believes “is perfect in every way,” from her songwriting skills to her dance moves, but who might struggle to stand out from the pack.

“As I was thinking about how to launch her,” Mr. Fuller said he thought: “What if I made her virtual? Then you have the point of difference.”